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March 15, 2007

Google has started making tests in the $52-billion a year television advertising market by serving a series of ads with a Bay Area cable provider.

However, some industry pundits say the Internet search company may already be too late in that highly specialized game.

Overall, Google already dominates the Internet advertising industry, and it has been talking about TV ads for much of the past year. However, companies such as Spot Runner have spent the last three years dishing up geo-targeted ads to cable stations across the U.S.

Spot Runner, a Los Angeles-based company, says its technology and established industry relationships give it a strong edge over Google when it comes to providing an automated platform for delivering relevant TV ads to specific neighborhoods via cable.

“Undoubtedly, the Google name and brand opens new doors, but the quality of what Spot Runner does is real impressive,” said Greg Sterling, analyst with Sterling Market Intelligence.

Spot Runner also produces lower-cost ads for smaller businesses that don't have the large budgets some TV advertisers have. Spot Runner has made friends with big advertising agencies and partnered with cable companies across the U.S.

Spot Runner has raised $60 million in funding from strategic investors such as CBS and advertising conglomerates WPP and Interpublic Group. That kind of industry clout has prompted suggestions Spot Runner may already be on Google’s acquisition list.

Neither Spot Runner CEO Nick Grouf or Google would comment on those suggestions. Industry analysts also said media companies or advertising industry firms could be interested as well. However, Sterling noted that Spot Runner’s success would allow the company to command a rich premium should Google or any other suitor make a bid.

Bidding for Spot Runner would fit very well with Google’s strategy to expand into traditional media advertising, which also includes radio and newspapers. It hasn’t been such a smooth road so far.

Google acquired radio advertising company dMarc Broadcasting for $102 million in January of last year, but Google has had little to show for its efforts to date. dMarc’s founders recently left the company.

There are also a lot of smaller players in the TV advertising segment, such as Dutch startup Spotzer, Cheap TV and Spot Innovation. “Google is going to have a fairly difficult time penetrating this specialized marketplace,” said Spot Runner’s Mr. Grouf.

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Source: Red Herring